China Rolls Out Pilot Test of Digital Currency
Internal tests of the digital currency are being conducted in four large cities around China—Shenzhen, Suzhou, Chengdu and Xiong’an, a satellite city of Beijing—to improve the currency’s functionality, the digital currency research institute under the People’s Bank of China confirmed Monday, in response to a request for comment.
The new currency, which doesn’t have an official name but is known by its internal shorthand “DC/EP,” or “digital currency/electronic payment,” will share some features with cryptocurrencies including bitcoin and Facebook Inc.’s Libra, PBOC officials have said. While it won’t boast the anonymity that bitcoin and other cryptocurrencies tout, China’s central bankers have vowed to protect users’ privacy.
The intention, China’s central bankers have said, is to replace some of China’s monetary base, or cash in circulation. It won’t replace other parts of the country’s money supply, such as bank deposits and balances held by privately-run payment platforms, Yi Gang, the governor of China’s central bank, said last year.
China is ahead of many other countries in preparing the launch of an official digital currency. In recent years, the use of traditional paper bills and cash has declined sharply, and smartphone payments have become so ubiquitous that many Chinese people, particularly younger urban dwellers, no longer carry their wallets or cash for shopping. Instead, they use Tencent Holdings Ltd. ’s WeChat Pay and Alipay, operated by Ant Financial Services Group, an affiliate of Alibaba Group Holding Ltd.
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